Taxes on Healthcare May be Reviewed
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12 March 2011
New Delhi, India
Finance minister Pranab Mukherjee on Friday indicated that the government will review some of the contentious tax proposals announced in the Budget.
Officials in the ministry said at least two proposals are going to be revisited. The first one pertains to the levy of service tax on healthcare, including diagnostic tests. Sources said the 5% levy on diagnostics would certainly be dropped given the pressure from doctors, hospitals and even members of the Congress. In case of the proposed 5% levy on treatment in centrally air–conditioned treatment centres with 25–bed in–patient facility, the ceiling may be enhanced.
On March 1, TOI was the first to report that the levy was being reviewed.
In addition, officials said the proposal to levy 18.5% minimum alternate tax on special economic zones’ developers and units was also being reviewed. While the broad contours of the revised proposal relating to MAT on SEZ, whose implementation has been advanced by a year, has been worked out, a final decision was yet to be taken, a senior official told TOI. The commerce department has already opposed the proposal.
Expressing surprise at the move, commerce and industry minister Anand Sharma had lodged his protest with Mukherjee. As reported by TOI on Sunday, the FM had said he would consult his colleagues on the issue. Only on Thursday, commerce secretary Rahul Khullar had said the proposal would act as a brake on rapid growth in the zones and send a wrong signal about India’s investment climate. In private, officials said the move would suggest that there was no certainty in government policy.
They said the FM had earlier endorsed the tax sops for SEZs in his capacity as the head of the group of ministers. The finance ministry has for long opposed the SEZ policy but the commerce ministry had its way. Revenue department officials said the MAT on SEZs would check migration of units from the software technology parks since tax benefits in these parks had come to an end. Revenue secretary Sunil Mitra had earlier told TOI that the proposed MAT could plug potential revenue loss of Rs 15,000 crore.